New Labour Code [2020] and Regulations | UPSC

New Labour Code [2020] and Regulations | UPSC


Changes in labour laws

      WHY IN NEWS:

What does the new Industrial Relations Code say? How does it affect unions and the right to strike?

MINISTRY? :- Ministry of Labour and Employment
SYLLABUS COVERED: GS 2 : 3 : Bills : DPSP : Wages : Remunerations


For PRELIMS it is important to understand the major provisions of the New Labour Code 2020.

For MAINS concentrate on concerns and changes in the code from 2019 . Let us dive in !


Three Codes on labour law were passed by Parliament this week, amid strident criticism and vociferous protests by many trade unions.

  • The Codes on industrial relations brings social security, occupational safety, health and working conditions amalgamated.
  • These labour code replace several diverse laws on the subject.
  • Last year, a separate Code on Wages was enacted.
  • The Codes enacted now are modified versions of the Industrial Relations Code Bill introduced in 2019.

Among these, the Industrial Relations Code is touted as one that would energise industry and spur economic activity.

  • Industrial Relations Code aims to free employees from the constraints of earlier labour laws.


The Industrial Relations Code combines the features of three erstwhile laws —

  • The Trade Unions Act, 1926.
  • The Industrial Employment (Standing Orders) Act, 1946.
  • The Industrial Disputes Act, 1947.


It defines ‘workers’ to include, besides all persons employed in a skilled or unskilled, manual, technical, operational and clerical capacity, supervisory staff drawing up to ₹18,000 a month as salary.

  • It introduces ‘fixed term employment’, giving employers the flexibility to hire workers based on requirement through a written contract.
  • Fixed term employees should be treated on a par with permanent workers in terms of hours of work, wages, allowances and other benefits.

Fixed term employees can also avail statutory benefits such as gratuity.

  • They should be allotted periods and hours of work, holidays, pay days etc.
  • The employee shifts, attendance, conditions for leave, termination of employment, or suspension is subjected to redressal of grievances.


  • Earlier, the 2019 Bill applied this to units with 100 employees or more.
  • The threshold has been raised to 300 in the 2020 Code.
  • The Code says any establishment that employs 300 or more workers must prepare standing orders relating to classification of workers.

It confers on the ‘appropriate Government’, that is the Centre or the State governments, the power to exempt, with or without conditions, any industrial establishment.


  • Where there is more than one trade union in an establishment, the sole negotiating union status will be given to the one that has 51% of the employees as its members.
  • It has been brought down from the 75% requirement in the 2019 version.

New Labour Code UPSC

New Labour Code UPSC

  • Where no union qualifies under this criterion, the employer must constitute a ‘negotiating council’ .
  • This will consist of representatives drawn from the various unions, with only those with at least 20% of employees as its members.


  • Prior permission of the government is needed for lay-off, retrenchment and closure .
  • These are made applicable to only establishments that had employed 300 or more workers .

The Code also allows the government to raise this threshold by notification.

  • A lay-off would be deemed illegal if it is effected without permission or is done despite refusal of permission.
  • It will not be illegal if the employee had been offered alternative employment or cause undue hardship.
  • The Code prescribes notice period and prior permission before retrenchment of anyone who has been in continuous service for a year or more.
  • Such a prior permission requirement is in place also for closure of a unit, with the application to be filed 90 days prior to the intended closure.


The Code prohibits strikes and lock-outs in all industrial establishments without notice.

  • No unit shall go on strike in breach of contract without giving notice 60 days before the strike.
  • The code also permit strike within 14 days of giving such a notice, or before the expiry of any date given in the notice for the strike.
  • Further, there should be no strike during any conciliation proceedings, or within seven days of the conclusion of such proceedings.

The code prohibits strike during proceedings before an industrial tribunal or 60 days after their conclusion or during arbitration proceedings.

  • Similar restrictions have been given on the employer from announcing a lock-out.

      IASbhai WINDUP: 

  • The Industrial Disputes Act, 1947, had placed such restrictions on announcing strikes only in respect of public utility services.

However, the present Code extends it to all establishments.

  • Even the Standing Committee on Labour had favoured limiting these provisions to public utilities.
     SOURCES:THE HINDU & PIB | New Labour Code [2020] and Regulations | UPSC



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